Bad Tennants

From: Simon Ballinger

I have just read Jan's latest book and am seriously considering becoming a first time residential property investor.
However a number of people are warning me off by saying "You'll only get bad tenants who will wreck the place", or "I had a property which has lost value due to bad tenants", or "no-one will look after a rental property".
Jan does not give this a big mention in her book.
Do investors out there find that this is a real problem - or is it that the few bad tenants give the rest a bad name.
Any advice would be much appreciated.
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Reply: 1
From: See Change


There are some tenants who are always "bad tenants" and it is the job of a good property manager to find out who these are.

Other tenants may start out good but for various reasons , losing job , psychopathic boy/girl friend, illness , separation etc may turn bad. Again it is the job of a good Property Manager to be aware when things start going wrong to stop them becoming bad.

The most important thing to have outside a good property manager is landlord insurance.

Bad tenants can be a problem and worse in some areas than others. Often it is worse in areas with higher returns but like many things in investment, if you take the appropriate risk management strategies it should be controllable.

see change

it's better to be guided by your dreams than your fears
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Reply: 1.1
From: Michele B

Simon, start out with a property mgr but find out exactly what they do and how they do it. Then do it yourself for a while until you have enough IPs to make this impractical. You'll learn enough to get the best from future property mgrs and you'll gain some valuable life and people skills, esp assertiveness training!!
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Reply: 2
From: Splinter Wood


Watch out for the negative advice. I bought my first place in a solid old concrete 5 storey block in the city (Sydney) with no lift. Figured, low maintenance/management, and if the place gets trashed, it will cost me carpet and paint. As it turned out I had 2 bad tenants over a 7 year period. They actually both did a runner. No big deal really - just put new carpet in and painted the joint ! No Fuss) Would have had to do it anyway as normal wear n tear does this...

The quality of the tenants had no bearing on the price I got in January. If you are nervous, look for an IP with low maintenance and one you can get in and clean up yourself if needed. Houses are often more trouble - with gardens, gutters, rooves etc and far more maintenance may be required.

One tip is have your PM get Photocopies of Passports for international tenants and drivers License copies (minimum) for Citizens.

Apartments are easier.

Go for it. (Change your advisors)

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Reply: 2.1
From: Ian Parham

Hello Simon

Without trying to come across the wrong way, as my intention is always to assist people, have you had an opportunity to conduct a search of the forum archives on this topic as yet? Just for you to get a feel for the myriad of feedback people have given to date.

I have a couple of properties and a couple of problem tenant issues too mention if you wish. However, the problem tenants are relatively insignificant when I look at other sensational tenants I have had.

Feel free to e-mail me....I like to chat a bit...too much for forum etiquette ;>)

Regards Ian
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Reply: 2.1.1
From: PT Bear

Most investors will sooner or later have bad tenants - I have.

If you do have tenants who don't pay or wreak the property, don't beat around the bush - get rid of them as soon as possible and move on. It also helps a lot if you've got a good property manager (if the property manager is the cause of the bad tenants, sack them and find a good one).

In my case, the house was leased the first weekend after I put it back on the market. I also had good insurance and didn't loose a cent in the who affair.


"Have fun, be successful, make lots of money, be someone who makes a difference, and above all else, don't forget the view."
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Reply: 3
From: Anonymous

Two investment properties side by side.
One was evicted for not paying rent and causing damage, Lucky we
had Landlord Insurance to keep the repair cost down, Still negotiating
settlement with the insurance assessor.
I feel the managing agent was not up to scratch here. They put the
tenant in and knew them previously

Next door recently gave notice to vacate. They had always been untidy
and the housework very minimal . A different agent had this property
and had to , on ocassions, followed up on the rental money and
general housekeeping.t
However expecting the worse on inspection The house literally shone.
The tenant did a beautiful job of cleaning the house that it could have
been rented immediately. However it was an opportune time to paint
and recarpet.
I guess a/ the managing agent is very important in the issue
b/ Maybe tenants should not be prejudged too
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Reply: 3.1
From: Ross Sneddon

Hi Simon

Unfortunately bad tenants are out there and it is hard for the individual investor to control the situation, but to be prepared. When it happens, fix the problem and keep going. Don't look back.

What to do about it?

1. Try and avoid purchasing an investment property in the lowest price level or one that even when refurbished is low down on the letting order. It doesn't always follow but statistics indicate that the bottom of the letting market is likely to have more problems.

2. Aim for a rent just a little below top renting dollar, you will get a greater number of applicants, you can be more choosy, find a better quality potential tenant and lessen the chances of the really bad tenant.

With a slightly more modest rental the better tenant is more likely to look after your property, not always but more often.

I believe in a local property manager. Tell them what you want. Let them know that you are the boss.

3. Ask the PM if they carry a blanket property agency insurance cover. Most insurances are effected on the individual property and are more expensive as each must be established by the insurance cover as a separate policy. Agency cover means "one" policy covering all properties.

I know of two insurance companies that have such a policy. They are called "Rent Cover Plus" & "Landlord Preferred". I personally use Landlord Preferred.

The policy is taken out by the agency to cover ALL of the properties inn their management. The PM notifies the insurance company. on a monthly basis which landlords and properties are included in the scheme.

It will cover you against the "Tenant from Hell" or their guests. It covers for deliberate and malicious damage, theft of fixtures and interior fittings, loss of rent from damage for those who do a moonlight flit and costs you a lot of money. Like all insurance policies, conditions apply and read the fine print etc.,

Properties with other titles may also be similarly covered.

As expected, the policy is covered by a thirty page contract, so check it out for all the details. Premiums vary state to state and by area but it costs about $210 to $250 per annum and is tax deductible.

I am not associated with either companies and do not receive any commission or payment.


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